Drug firms argue against $1.2B Arkansas judgment

Drug firms argue against $1.2B Arkansas judgment

February 27th, 2014by CHUCK BARTELS, Associated Press
in News

LITTLE ROCK, Ark. (AP) - A lawyer for two pharmaceutical companies argued Thursday that the Arkansas Supreme Court should reverse a $1.2 billion judgment because the trial judge improperly applied a law in the state's lawsuit over improper marketing of the antipsychotic drug Risperdal.

Attorney Walter Dellinger said there was no fraud or improper reimbursements for Medicaid patients who were prescribed the drug, even though the state pursued Johnson & Johnson and its subsidiary, Janssen Pharmaceuticals Inc., under the state's Medicaid fraud statute.

"There was no harm to the state Medicaid program," Dellinger said.

Arkansas Attorney General Dustin McDaniel's office hired an outside law firm to handle the case. Washington, D.C.-based attorney David Frederick argued for the state, saying the companies didn't properly communicate the risks of the drug and marketed it for off-label use.

"That is fraud," Fredericks said.

Risperdal was introduced in 1994 as a "second-generation" antipsychotics drug that earned Johnson & Johnson billions of dollars in sales before generic versions became available years ago. It is used to treat schizophrenia, bipolar disorder and irritability in autism patients.

Risperdal and similar antipsychotics drugs have been linked to increased risk of strokes and death in elderly patients, seizures, weight gain and diabetes.

McDaniel said after oral arguments that he's confident the state will prevail. A $330 million verdict against J&J and Janssen in Louisiana was overturned last month, but McDaniel said Louisiana's law is different from Arkansas'.

"Sixty-five legislators from both parties signed onto an amicus brief indicating that this is precisely why the Legislature gave the attorney general broad powers to enforce fraud - to protect taxpayer dollars and to protect patients," McDaniel said.

Since Circuit Judge Tim Fox's ruling in 2012, Arkansas convened its first Republican-dominated Legislature in the state's modern history, McDaniel noted.

"They didn't change one word of this act," he said.

A group of 35 attorneys general also filed a friend of the court brief in support of upholding the trial court's judgment.

The lower court ordered the companies, both based in New Jersey, to pay $5,000 for each of 240,000 Risperdal prescriptions the state Medicaid program paid for during a 3 1/2-year span. Fox also fined the companies $2,500 for each of more than 4,500 letters Janssen sent to Arkansas doctors that the state said downplayed Risperdal's side effects. That totaled about $11 million.

In a separate action brought by the Justice Department, Johnson & Johnson agreed in November to pay more than $2.2 billion to resolve criminal and civil allegations that the company promoted powerful psychiatric drugs, including Risperdal, for unapproved uses in children, seniors and disabled patients.

The agreement was the third-largest settlement with a drug maker in U.S. history. The Arkansas judgment was the largest in state history. The companies are also appealing an award of 15 percent of the judgment in attorney fees.

The high court will rule later.

J&J and Janssen are also awaiting a ruling by the South Carolina Supreme Court. The companies have an appeal pending of a $327 million judgment, in a similar case.